life insurance exam questions

c. grace period

what required provision protects against unintentional lapse of the policy? a. payment of premiums b. reinstatement c. grace period d. assignment

c. rated

another name for a substandard risk classification is a. declined b. elevated c. rated d. controlled

b. solicit new business

following the death of her husband, an insurance agent, mary obtained a temporary insurance license. this license will allow mary to do all of the following, except a. conclude existing business b. solicit new business c. receive commissions on existing business d. maintain existing business

b. elected by the public for a 4-year term in the same election in which other state officials are chosen

how is the commissioner of insurance selected in mississippi? a. appointed by the legislature, with the approval of the attorney general b. elected by the public for a 4- year term in the same election in which other state officials are chosen c. elected by the public for a 2- year term at a special election d. appointed by the governor, with the approval of the legislature

a. collateral assignment

a business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. the business owner then decided to use her $250,000 life insurance policy to secure the loan. which provision makes this possible? a. collateral assignment b. insurable interest c. modification clause d. ownership provision

a. the benefit is received tax free

a corporation is the owner and beneficiary of the key person life policy. if the corporation collects the policy benefit, then a. the benefit is received tax free b. the benefit is subject to the exclusionary rule c. IRS has no jurisdiction d. the benefit is received as taxable income

c. when the application is signed and a check is given to the agent

when is the earliest a policy may go into effect? a. when the insurer approves the application b. after the underwriter reviews the policy c. when the application is signed and a check is given to the agent d. when the first premium is paid and the policy has been delivered

a. annual

which of the following premium payment modes will incur the lowest overall payment? a. annual b. semi-annual c. quarterly d. monthly

b. required a premium increase each renewal

a man decided to purchase a $100,000 annually renewable term life policy to provide additional protection until his children finished college. he discovered that his policy a. decreased death benefit at each renewal b. required a premium increase each renewal c. built cash values d. required proof of insurability every year

d. the date of medical exam

an individual applied for an insurance policy and paid the initial premium. the insurer issued a conditional receipt. five days later the applicant had to submit to a medical exam. if the policy is issued what would be the policy's effective date? a. the date of policy delivery b. the date of issue c. the date of application d. the date of medical exam

c. pay a reduced death benefit

an insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. he is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. what will the company do? a. pay nothing; there was a misrepresentation on the application b. pay the full death benefit and refund excess premium c. pay a reduced death benefit d. pay the full death benefit

c. $50,000

an insured owns a $50,000 whole life policy. at age 47, the insured decides to cancel his policy and exercise the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. what would be the face amount of the new term policy? a. $20,000 b. $25,000 c. $50,000 d. the face amount will be determined by the insurer

d. 180 days

following the death of a licensed agent, the executor or administrator of the deceased agent's estate, or the next of kin could obtain a temporary insurance license, without testing, issued for a period of a. 120 days b. 150 days c. 6 months d. 180 days

a. viatical settlement

an insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. the insured knows that his financial state will worsen even more with the upcoming medical expenses. what option could the insured utilize? a. viatical settlement b. estate liquidation c. nonpayment of premium d. change of beneficiary

d. SEC registration

to sell variable life insurance policies, an agent must receive all of the following EXCEPT a. FINRA registration b. a securities license c. a life insurance license d. SEC registration

c. third-party ownership

which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner? a. a buy-sell agreement b. family term rider c. third-party ownership d. an irrevocable beneficiary

b. pay-in period

which of the following is another term for the accumulation period of an annuity? a. annuity period b. pay-in period c. premium period d. liquidation period

c. one-year term option

the dividend option in which the policy owner uses dividends to purchase a term policy for one year is referred to as the a. accelerated endowment b. paid-up additions c. one-year term option d. paid-up option

d. the insured's age at death

the insured had his wife named as the beneficiary of his life insurance policy. to ensure that his wife had income for life after the insured's death, he chose the life income settlement option. the amount of payments will be determined by taking into account all of the following EXCEPT a. the beneficiary's life expectancy b. projected interest rates c. face amount of the policy d. the insured's age at death

c. the amount of premium payment

which of the following information will be stated in the consideration clause of a life insurance policy? a. the time period allowed for the payment of premium b. the conditions for insurability c. the amount of premium payment d. the parties to the contract

a. variable whole life has a guaranteed death benefit

which of the following is a key distinction between variable whole life and variable universal life products? a. variable whole life has a guaranteed death benefit b. variable universal life is regulated solely through FINRA c. variable whole life allows policy loans from the cash value d. variable universal life has a fixed premium

d. nonrenewable coverage expiring in 8 years

to which of the following situations does the replacement regulation apply? a. group life insurance b. immediate annuities purchased with proceeds from an existing policy c. coverage under a binding receipt issued by the same company d. nonrenewable coverage expiring in 8 years

b. joint life

twin brothers are starting a new business. they know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. what type of insurance would be the most affordable and still provide a death benefit should one of them die? a. ordinary life b. joint life c. decreasing term d. whole life

c. fixed-period installments

all of the following are dividend options EXCEPT a. reduction of premium b. paid-up additions c. fixed-period installments d. accumulated at interest

a. fraud

an insurance company assures its new policyholders that their premium costs will not increase for a period of at least five years. however, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. what term best describes this act? a. fraud b. defamation c. unfair discrimination d. errors and omissions

d. it will increase because the insured will be 5 years older than when the policy was originally purchased

an insured buys a 5-year level premium term policy with a face amount of $10,000. the policy also contains renewability and convertibility options. when the insured renews the policy in 5 years. what will happen to the premium? a. it will remain the same for the new 5-year term b. it will decrease for the new 5-year term since the insured is now a lesser risk to the company c. it will increase each year during the next 5 years as the face amount increases each year d. it will increase because the insured will be 5 years older then when the policy was originally purchased

c. pay the death benefit

an insured purchased a life insurance policy in 2010 and died in 2017. the insurance company discovers at that time that the insured had misstated information during the application process. what can they do? a. pay a decreased death benefit b. sue for the right to not pay the death benefit c. pay the death benefit d. refuse to pay the death benefit because of the misstatement on the application

a. guaranteed insurability

at the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. this rider is called a. guaranteed insurability b. waiver of cost of insurance c. accelerated benefits d. cost of living

b. with the policy

if a policy includes a free-look period of at least 10 days, the buyer's guide may be delivered to the applicant no later than a. prior to filling out an application for insurance b. with the policy c. upon issuance of the policy d. within 30 days after the first premium payment was collected

c. settlement option

if an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a a. nonforfeiture option b. rollover c. settlement option d. nontaxable exchange

d. the policy will be interpreted as if the insurer waived its right to have an answer on the application

if an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE? a. the policy will be interpreted as if the insured did not have an answer to the question b. the policy will be void c. the insurer may deny coverage later, because of the information missing on the application d. the policy will be interpreted as if the insurer waived its right to have an answer on the application

a. upon the last death

in a survivorship life policy, when does the insurer pay the death benefit? a. upon the last death b. upon the first death c. half at the first, and half at the second death d. if the insured survives to age 100

d. gross premium

mortality - interest + expense = a. benefits budget b. operating expenses c. net premium d. gross premium

d. any form of life insurance

partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. what type of insurance policy may be used to fund this agreement? a. term insurance only b. permanent insurance only c. universal life insurance only d. any form of life insurance

d. annually renewable term

the LEAST expensive first-year premium is found in which of the following policies? a. increasing term b. decreasing term c. level term d. annually renewable term

c. 5 years

the commissioner will examine financial records of every authorized insurer as often as deemed necessary, but at least every a. year b. 2 years c. 5 years d. 7 years

c. annually renewable term

the death protection component of universal life insurance is always a. adjusting life b. decreasing term c. annually renewable term d. whole life

b. lower

the premium of a survivorship life policy compared to that of a joint life policy would be a. half the amount b. lower c. higher d. as high

d. to protect policyowners against insurer insolvency

what is the purpose of the insurance guaranty association? a. to protect insurance companies against insurance fraud b. to provide double indemnity for the insured's loss c. to prevent unfair trade practices d. to protect policyowners against insurer insolvency

a. FINRA

an agent selling variable annuities must be registered with a. FINRA b. department of insurance c. the guaranty association d. SEC

a. both the principal and interest will be liquidated over a selected period of time

which of the following best describes fixed-period settlement option? a. both the principal and interest will be liquidated over a selected period of time b. only the principal amount will be paid out within a specified period of time c. the death benefit must be paid out in a lump sum within a certain time period d. income is guaranteed for the life of the beneficiary

a. the trust that a client places in the producer in regard to handling premiums

which of the following is an example of a producer's fiduciary duty? a. the trust that a client places in the producer in regard to handling premiums b. an obligation to state every known fact about the policy the producer is selling c. a duty to base all transactions upon the principle of utmost good faith d. the obligation to tell the truth to the best of one's knowledge

a. premiums are not tax deductible as a business expense

which of the following is correct concerning the taxation of premiums in a key-person life insurance policy? a. premiums are not tax deductible as a business expense b. premiums are tax deductible by the key employee c. premiums are tax deductible as a business expense d. premiums are taxable to the employee

a. they allow several small employers to purchase less expensive insurance together

which of the following is true regarding METs? a. they allow several small employers to purchase less expensive insurance together b. they make deals with local hospitals to provide low cost coverage to the needy c. they provide insurance for larger corporations d. they provide insurance companies with medical information on applicants

b. payor benefit rider

which of the following riders would NOT cause the death benefit to increase? a. accidental death rider b. payor benefit rider c. guaranteed insurability rider d. cost of living rider

a. substandard risk

which of the following types of risk will result in the highest premium? a. substandard risk b. standard risk c. preferred risk d. all risks pay equal premiums

c. premium amounts and surrender values

which of the following will be included in a policy summary? a. comparisons with similar policies b. primary and secondary beneficiary designations c. premium amounts and surrender values d. copies of illustrations and application

a. revocable beneficiary

a policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. she also wishes to retain all of the rights of ownership. the policyowner should have her husband named as the a. revocable beneficiary b. secondary beneficiary c. contingent beneficiary d. irrevocable beneficiary

c. the insureds contingent beneficiary

when a life insurance policy was issued, the policyowner designated a primary and a contingent beneficiary. several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. which of the following would receive the death benefit? a. the insured's estate b. the primary beneficiary's estate c. the insured's contingent beneficiary d. the insurance company

a. purchase a single premium policy for a reduced face amount

when a whole life policy lapses or is surrendered prior to maturity, the cash value can be used a. purchase a single premium policy for a reduced face amount b. purchase a term rider to attach to the policy c. pay back all premiums owed plus interest d. receive payments for a fixed amount

b. life income with period certain

which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary? a. fixed-amount b. life income with period certain c. joint and survivor d. single life

d. it permits the insured to return the policy for a full refund of premiums paid

which of the following applies to the 10-day free-look privilege? a. it allows the insured 10 days to pay the initial premium b. it can be waived only by the insurance company c. it is granted only at the option of the agent d. it permits the insured to return the policy for a full refund of premiums paid

d. disputes regarding consumer report information

according to the fair credit reporting act, all of the following would be considered negative information about a consumer EXCEPT a. tax delinquencies b. late payments c. failure to pay off a loan d. disputes regarding consumer report information

a. the plan is funded by permanent insurance only

all of the following are true of key person insurance EXCEPT a. the plan is funded by permanent insurance only b. there is no limitation on the number of key employee plans in force at any one time c. the employer is the owner, payor, and beneficiary of the policy d. the key employee is the insured

b. they stem from favorable underwriting experience

all of the following statements concerning dividends are true EXCEPT: a. lower insurance company costs generate higher dividends b. they stem from favorable underwriting experience c. favorable investment results generate higher dividends d. dividend amounts are guaranteed in the policy

d. has at least 50 members

an association could buy group insurance for its members if it meets all of the following requirements EXCEPT a. has a constitution and by-laws b. holds annual meetings c. is contributory d. has at least 50 members

c. the beneficiary must have insurable interest in the insured

which is NOT true about beneficiary designations? a. the policy does not have to have a beneficiary named in order to be valid b. trusts can be valid beneficiaries c. the beneficiary may have insurable interest in the insured d. the beneficiary may be a natural person

a. within 30 days

if a licensed agent has a change of residence address, the commissioner must be notified a. within 30 days b. within 60 days c. promptly d. within 15 days

a. level term

a policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. what type of policy is this? a. level term b. term to specified age c. ordinary life policy d. limited pay whole life

a. statement of good health

eddie submitted an application for life insurance without paying the premium. the application was approved, and now the agent is delivering the policy. what should the agent have eddie sign? a. statement of good health b. statement declaring that he understands all riders c. nothing. eddie only needed to sign the application d. confirmation of delivery

c. policy loans can be made on policies that do no accumulate cash value

all of the following are true regarding insurance policy loans except a. the policy will terminate if the loan plus interest equals or exceeds the cash value of the policy b. policyowners can borrow up to the full amount of their whole life policy's cash value c. policy loans can be made on policies that do not accumulate cash value d. the amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured dies

b. a 60-year-old man

all other factors being equal, which of the following individuals would receive the largest monthly check from a single premium straight life immediate annuity? a. a 50-year-old woman b. a 60-year-old man c. a 60-year-old woman d. a 50-year-old man

b. refund the premiums paid

an insured committed suicide one year after his life insurance policy was issued. the insurer will a. pay nothing b. refund the premiums paid c. pay the policy's cash value d. pay the full death benefit to the beneficiary

interest only option

the policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. which settlement option should the policyowner choose? a. joint and survivor b. fixed amount option c. interest only option d. life income with period certain

a. promote the public welfare

the purpose of insurance regulation is to a. promote the public welfare b. make insurance statutes uniform between states c. keep agents honest d. make insurance companies pay taxes

d. fiduciary responsibility

the requirement that agents not commingle insurance monies with their own funds is known as a. premium accountability b. express authority c. accepted accounting principal d. fiduciary responsibility

b. level term

which of the following is NOT a type of whole life insurance? a. limited payment b. level term c. single premium d. straight life

c. the surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive

an insured has chosen joint and 2/3 survivor as the settlement option. what does this mean to the beneficiaries? a. the beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies b. one of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies c. the surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive d. the beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time

a. when an insurer's underwriter approves coverage

in forming an insurance contract, when does acceptance usually occur? a. when an insurer's underwriter approves coverage b. when an insurer delivers the policy c. when an insurer receives an application d. when an insured submits an application

b. promptly forwarding premiums to the insurance company

pertaining to insurance, what is the definition of a fiduciary responsibility? a. offering additional coverage to clients b. promptly forwarding premiums to the insurance company c. helping insureds to file claims d. performing reviews of insureds coverage

d. insurance companies from adverse selection by high risk persons

the medical information bureau (MIB) was created to protect a. insurance departments from lawsuits by policyowners b. insureds from unreasonable underwriting requirements by the insurance companies c. medical examiners that perform insurance physical examinations d. insurance companies from adverse selection by high risk persons

a. an index like standard & poor's 500

the minimum interest rate on an equity indexed annuity is often based on a. an index like standard & poor's 500 b. the returns from the insurance company's separate account c. the annuitant's individual stock portfolio d. the insurance company's general account investments

a. waiver of premium

the rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called a. waiver of premium b. guaranteed insurability c. waiver of cost of insurance d. payor benefit

c. the same face amount as in the whole life policy

under an extended term nonforfeiture option, the policy cash value is converted to a. a lower face amount than the whole life policy b. a higher face amount than the whole life policy c. the same face amount as the whole life policy d. the face amount equal to the cash value

d. the original age is used for premium determination

what is the advantage of reinstating a policy instead of applying for a new one? a. proof of insurability is not required b. the face amount can be increased c. the cash values have gained interest while the policy was lapsed d. the original age is used for premium determination

c. to allow the consumer to compare the costs of different policies

what is the purpose of the buyer's guide a. to list all policy riders b. to provide information about the issued policy c. to allow the consumer to compare the costs of different policies d. to provide the name and address of the agent/producer issuing the policy

d. death due to plane crash for a fare-paying passenger

which of the following is NOT typically excluded from life policies? a. self-inflicted death b. death that occurs while a person is committing a felony c. death due to war on military service d. death due to plane crash for a fare-paying passenger

b. straight life

which of the following policies would be classified as a traditional level premium contact? a. variable universal life b. straight life c. adjustable life d. universal life

a. face amount

which policy component decreases in decreasing term insurance? a. face amount b. cash value c. dividend d. premium

c. revocable

which type of beneficiary is changeable at any point? a. primary b. irrevocable c. revocable d. contingent

d. after more than 1 year

with a single premium deferred annuity (SPDA), when are the benefits paid a. after the death of the owner b. when the owner retires c. when the owner turns 100 d. after more than 1 year